Traditionally relegated to a mere fraction of banks' annual reports, sustainability reporting has undergone a notable shift, with many banks now unveiling standalone sustainability reports.
Late last month, Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) unveiled its 2024 sustainability report, distinct from its annual report.
Comprising an extensive 195 pages, akin to its annual report in detail, HDBank's sustainability report provides a comprehensive panorama of the bank's strategies. Anchored on the 18 criteria outlined by the Global Reporting Initiative (GRI), HDBank's report includes information on objectives and commitments, strategies and governance, implementation and initiatives, achieved outcomes, and future perspectives.
Additionally, it underscores the bank’s adherence to ESG (Environmental, Social, Governance) activities in line with international benchmarks.
HDBank stands among the vanguard of Vietnamese banks in issuing a dedicated sustainability report. Prior to this, Asia Commercial Joint Stock Bank (ACB) also issued its individual sustainability report, underscoring its efforts in sustainable development.
The report showed ACB's endeavors, system enhancements, and products/services aimed at bolstering efficiency and enriching the bank's business operations while accentuating carbon reduction and curbing lending to environmentally adverse projects.
BIDV, one of Vietnam's premier state-owned banks, also published its sustainability report. Spanning 112 pages, the report provided details about BIDV’s aspirations, strategies, sustainability pledges, and ESG undertakings last year.
While sustainability reporting once occupied a marginal slice of annual reports, the publication of these reports by lots of banks underscores the importance of sustainable development in financial sector.
During this year's shareholders' gatherings, the leadership of many banks emphasized the significance of sustainable development strategies and ESG practices. For banks such as HDBank, ACB, and BIDV, green and sustainable lending is fast evolving into focus.
The Green Filter for Financing
Leading global banks like Morgan Stanley, HSBC, Goldman Sachs, and JPMorgan in recent years have pledged investments ranging from $750 billion to $2.5 trillion in sustainable finance by 2030.
PwC in its report underscores the criticality of integrating ESG into domestic banks' operations. By embracing ESG, banks can craft visions and execute strategies aligned with sustainability goals.
HDBank's report highlighted remarkable green credit disbursements, with a green finance portfolio surpassing US470 million by end-2023. Disbursements to enterprises owned by women exceeded US130 million in 2023.
Furthermore, HD Saison, HDBank’s consumer finance arm, disbursed nearly US310 million in preferential loans to workers in industrial zones, uplifting their living standards.
HDBank also directed its funds towards eco-friendly and socially beneficial business activities, supporting sectors with positive environmental impacts such as renewable energy, electric vehicle production, green technology agriculture, green buildings, and water quality enhancement.
For sustainable finance, HDBank provided robust funding for agriculture, rural areas, public health, education, small and medium-sized enterprises, essential goods supply chains, and women-owned businesses.
"The prioritization of capital reflects our efforts to shape a sustainable future for the economy and our community responsibilities," shared HDBank’s leadership.
At ACB, a pivotal aspect of ESG implementation is constructing a green finance framework to effectively filter and manage green credit products and programs. Tang Hoang Quoc Thai, ACB’s Director of communications and branding, remarked: “We will intensify green credit to augment disbursement for environmentally positive enterprises."
Embracing green credit facilitates international capital access, according to HDBank. It raised over US170 million in green credit from international financial institutions like Proparco and IFC last year.
Other international organizations also boosted trade finance limits for HDBank, encouraging transactions for importing equipment for renewable energy, green agriculture, and sustainable finance sectors. By 2023, these limits exceeded $240 million.
World Bank estimated that Vietnam needs to mobilize around US368 – 380 billion annually, equivalent to 6.8 per cent of GDP, until 2040 to achieve its 2050 net-zero target. Consequently, international resources are pivotal for Vietnam's green transition.
With commitments from businesses and private investment funds to reduce carbon emissions, increased capital will be mobilized to transition to green and socially responsible business models.
PwC noted that through ESG practices in their lending portfolios, domestic banks are enhancing their position among foreign investors. ESG criteria are increasingly influencing financial sector M&A strategies as investors leverage these criteria to assess risks and identify investment opportunities.
